WuXi AppTec wins removal from the Pentagon's Chinese military list

WuXi AppTec, one of the drug industry's biggest outsourced research and manufacturing partners, is off the Pentagon's list of Chinese military companies, for now. The Defense Department removed the Shanghai-based company from its Section 1260H list on Monday, according to a government posting reported by CNA, complying with a federal court order that blocked the designation in August. The move eases pressure on a supplier that U.S. drugmakers rely on, but it leaves the door open to new restrictions.

The removal is "without prejudice to relisting the company on additional or supplementary grounds", according to the Federal Register notice, Pharma Manufacturing reported. The deputy secretary of defense made the determination in light of the court's injunction, the posting said. It ends months of skirmishing between the administration and the company, a contract research, development and manufacturing organization, or CRDMO, that STAT described as a key contract developer and manufacturer for the pharmaceutical industry.

The fight began in June. The Pentagon expanded its list of alleged Chinese military companies on June 8 to 188 entities, adding WuXi AppTec. The department's list said WuXi AppTec is indirectly owned by China's State-Owned Assets Supervision and Administration Commission of the State Council and indirectly affiliated with the People's Liberation Army and the State Administration of Science, Technology and Industry for National Defense. The company strongly objects to those allegations.

WuXi AppTec sued on June 11 in federal court in Washington, arguing that the designation was arbitrary, capricious, unsupported by the facts and the product of political pressure. It said the label had inflicted substantial reputational, commercial and operational harm. On June 29 it asked the court for a preliminary injunction to stop the department from enforcing the designation while the case proceeds.

It won that round on Aug. 7. Chief Judge James Boasberg of the U.S. District Court for the District of Columbia barred the department from enforcing or giving effect to the designation and found the company had shown a likelihood that it was arbitrary and capricious under the Administrative Procedure Act, according to Pharma Manufacturing's account of the ruling. Boasberg noted that WuXi AppTec's customers and suppliers had "canceled contracts, terminated longstanding relationships, and moved their business to competitors" after the listing.

The stakes go beyond reputation. Congress stacked serious consequences on a 1260H designation, Boasberg wrote, including a bar on Defense Department contracts, limits on certain federal funds and a path to treatment as a biotechnology company of concern under the BIOSECURE Act. That second designation is the next risk. WuXi AppTec general counsel Howard Wu acknowledged on the company's earnings call last month that it could still be named a biotechnology company of concern by the Office of Management and Budget, which is expected to publish that list by the end of 2026. Wu said the company was not aware of any proposed designation.

After the August ruling, a WuXi AppTec spokesperson said the decision relieved the company of the immediate consequences of what it called an erroneous designation while the litigation continues, and that its operations remain fully functional.

The case sits inside a larger tension in drug supply chains. China hawks in Washington see WuXi as a rising national security threat, STAT reported. Yet biopharmaceutical companies are increasingly choosing to manufacture newer FDA-approved innovator and biosimilar products at facilities in China, according to an analysis by the data firm GlobalData. U.S.-based companies accounted for more than half of the companies choosing Chinese facilities in 2026 for innovator and biosimilar drugs approved by the FDA between 2020 and 2025, GlobalData found.

GlobalData also warned that even though the court blocked WuXi AppTec's designation, the episode highlights a potential pathway for U.S. policymakers to target and limit reliance on Chinese contract manufacturers. For drugmakers that use WuXi AppTec, Monday's delisting removes an immediate legal cloud. Whether the government relists the company, or OMB names it under the BIOSECURE Act, will decide how long that relief lasts.

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